Newsletter 2/2018

Dear valued clients and business associates,

Wish you had a great Chinese New Year break. In this issue, we would like to highlight to you the latest update to GST-03 which you should take note of.

We will also be organising a GST Update seminar on 11th April 2018. For more details, please see below.

Happy reading!

With compliments from,
M.S.Wong & Co.

GST-03 Item 15

We have previously reported the amendment to GST-03 to replace the old item 15 (Total Value of GST Suspended under Item 14) to the new item 15 (Total Value of other supplies). Additional information is now available through the newly updated guide for accounting software that was issued on 8th March 2018.

This amendment comes into force on 1st Jan 2018. However, a registered person is given until 30th June 2018 to adopt these changes. It is therefore not mandatory for a registered person to declare his total value of other supplies in the GST-03 return until 30th June 2018.

What should I include in item 15 of GST-03 return?
RMCD has proposed the following tax codes as type of transactions that should be included in item 15 of GST-03

Supplies Proposed Tax code
Disregarded supplies GS
Supplies where tax is not changeable NTX
Supplies under Approved Jeweller Scheme (AJS) SR-JWS
Supplies made outside Malaysia or not within the scope of GST OS-TXM, OS

From the guide on accounting software, RMCD strongly advises a registered person to include transactions involving payments that are received from another party or are treated as an income to the business. The following are some examples of transactions provided by RMCD to be included item 15 of GST-03:

1. Disbursement;
2. Refundable deposit;
3. Contribution, donation, grant, sponsorship or compensation received from another party;
4. Transactions which are treated as neither a supply of goods nor services under Second Schedule of GST Act 2014 except payment or contribution made to the pension, provident or social security fund (e.g. EPF, SOCSO etc).

The proposed tax code for the above transactions is OS.

What type of transactions should NOT be included?
A registered person is not required to include payments that are made to another party or are treated as expenses to the business.

1. Goods given for free and cost to the donor is less than RM500
2. Payment/contributions made to EPF or SOCSO;
3. Salary or allowance
4. Accounting transactions for example depreciation, classification of accounts etc.
Proposed tax code for the above transactions is NS.

Our Opinion
Please note that the Guide for Accounting Software is a guide interpreting the requirement of the GST Regulations, it is not mandatory. Our opinion is RMCD’s strong advice to include transactions involving payments that are received from another party or certain other income may not be consistent with a literal interpretation of the term “other supplies”.

Disbursement and refundable deposits are not supplies. This view is supported by DG’s decision 5/2015 which states that disbursement is not a supply. Secondly, to include transactions that are defined as neither a supply of goods nor services, under field “other supplies” sounds like a contradiction to us.

Further, using the principle of including “transactions involving payments that are received from another party or are treated as an income to the business is also dubious because it would include director and intercompany advances, collections on behalf etc. These are not supplies. 

Essentially, by following the advice by RMCD we will be including transactions that are not regarded as supplies. We hold the view that if we follow RMCD’s advice, we are not accurately declaring our other supplies.

Therefore, until further clarification from the Customs on the above matter and at least until the end of the non-mandatory period, our recommendation is to only include transactions that fit the proposed tax codes recommended by RMCD.

Lastly – when did gift expenses, payments for payroll related expenses and journal transactions become NS?

GST Seminar

We will be conducting a seminar on the latest GST updates.
Course details (Seminar notes in English and delivery will be in Mandarin):
Date: 11 April 2018 (Wednesday)
Location: Mutiara Hotel, Johor Bahru
Fees (Meals Included):

Early Bird RM 424
Normal RM 530

Early bird pricing only applies to registration or payment made by 5:30pm 25th March 2017. For more detailed information, refer to the brochure by clicking on the download link below.

GST Seminar Brochure
GST Seminar Registration Form